Forex news from the European trading session - 14 September 2021
Headlines:
- UK vaccine panel recommends COVID-19 booster programme to be started
- US August NFIB small business optimism index 100.1 vs 99.0 expected
- Kremlin says that Putin is 'absolutely healthy', does not have COVID-19
- IEA says progressing vaccinations should unlock pent-up demand for oil in Q4
- ECB's Villeroy maintains that inflation rise is temporary
- Hurricane Nicholas makes landfall along Texas coast
- UK August jobless claims change -58.6k vs -71.7k expected
Markets:
- GBP leads, AUD lags on the day
- European equities mixed; S&P 500 futures flat
- US 10-year yields up 1.5 bps to 1.34%
- Gold down 0.4% to $1,787.50
- WTI up 0.4% to $70.74
- Bitcoin up 1.8% to $45,990
It was a relatively quiet session with light moves overall as the market waits with bated breath on the US CPI data release later at 1230 GMT.
The dollar was steady amid some light pushing and pulling, with EUR/USD near unchanged at around 1.1810 while USD/JPY is up a little at 110.10 amid higher yields.
The pound was a modest performer as UK employment conditions caught back up to pre-pandemic levels, as the labour market continues its recovery process.
GBP/USD is seen moving up from 1.3840 to 1.3880 before keeping around 1.3860-70 now.
Elsewhere, the aussie is languishing after more dovish remarks earlier in the day by RBA governor Lowe, in saying that he is finding it difficult to see why the market would consider pricing in any rate hikes in 2022 and 2023.
AUD/USD is near the lows at 0.7330 after hanging around 0.7340-50 during the session.
In the commodities space, oil continues to stay perky with buyers testing the $71 level but yet to clinch a firm breakthrough just yet.
It's all about the US CPI coming up next to set the tone as that should signal a real kickstart to the new week after the unexciting mood so far. Some thoughts from earlier:
While the market is looking for something to work with, it may not necessarily have immediate implications for Fed policy. But as is the case with market moves, it is all about the anticipation and expectations instead.A hotter-than-expected inflation report may prompt concerns that the Fed's resolve on 'transitory' may not hold up for too long, paving the way for quicker normalisation in policy i.e. tapering in order to afford more flexibility going into next year.That will likely keep equities pressured after the more subdued period last week too.But still, I'd wager that a taper announcement will only come in November so the data here will only serve to reaffirm the timeline more than anything else realistically.
That said, a much softer report later (unlikely, since even a miss will still reflect relatively high inflation as a whole) could keep the market on edge with the dollar and yields likely to bear the brunt over any significant miss on estimates.
